Without a doubt, the absolute best time for a price reduction is when you first list your home for sale
It's wise to price it correctly when you sign the listing agreement, whether with a brokerage or a private sale marketing company. With the exception of really hot markets, where virtually everything sells in mere days, many listings remain on the market for a long, long time - too long - and often without buyer interest of any kind - viewings or offers.
If you're choosing the private sale route, if your home fails to sell quickly (or ever), you can only blame yourself for holding subjective and unrealistic market value expectations. Or you've done insufficient research on neighbourhood realty values. Or you've not properly prepared your home for market.
If you've sought professional assistance, don't blame your agent, unless of course, they goofed by recommending too high a list price in the first place. Or they failed to recommend a price reduction soon enough. Assuming they advised you correctly, all they can do is effectively expose your home to the marketplace. The reason for little to no action is really quite simple:
When evaluating your home, unless yours is an unusual situation, you should seriously consider property values in your immediate area. Chances are good that your property value will fall into the same range as others sold on your street, unless your home is really special.
There could be a freeway or high tension electricity corridor in your back yard, or your house could be situated under a noisy flight path or have gaping holes in the roof or a basement full of water. It doesn't matter what might pose a serious buyer concern.
It's been said that there's a buyer for every property - at the right price. It's just a matter of establishing as accurately as possible what that fair market value is.
Expired listings are almost always over-priced, either because the homeowner failed to be objective in their evaluation of their own home or the realty agent failed to accurately evaluate it as a result of negligence, inexperience or guile. Or a price reduction was not processed soon enough. In any case, the chances of your home selling are very poor. Typically, the most active time of any listing term is the ...
Naturally, this time period will vary depending on where you are on Mother Earth, and on the price range in which your home falls, the type of property and your local market conditions.
A luxury home, for example, with a high house value, obviously falls into a smaller segment of the market since there are fewer well-heeled people who have the purchasing power to afford a monster home (you know, those one per centers).
City or suburban homes or condos in a moderate price range will attract serious action sooner due to the larger pool of potential buyers typically searching for low to medium priced homes.
Rural homes in an average price range will also attract a fair amount of attention. However, country homes further away from a large suburban centre, or at the high end of the price scale, may require more time to sell.
Also, if your local market is depressed or there's a lot of competition from other sellers, it may take longer to sell your home. In such cases, a price reduction may not be advisable for a bit longer period - maybe 30 to 60 days.
At any given time and for most active markets, there are always buyers searching for homes. They do their daily diligence surfing the Internet in Canada and The United States for newly listed homes. They've already viewed and/or rejected every home currently on the market in their price range and target area. Therefore, it's just the ...
... that command their attention.
When your home first appears in their or their agent's search engine results, and they feel it's comparatively over-priced, they'll ignore it. By over-pricing, you've sent a clear message that you believe your home is worth more than what an objective buyer or their agent believe it is worth. Most buyers won't want to insult you with what they believe you'd probably feel is a low offer. And the buyer agents prefer to avoid a difficult offer presentation, or to even waste their time and effort.
Remember that buyers enjoy the benefit of candid professional advice with respect to house value, as you did when your agent first advised you on list price. Thus, they can't be duped.
A popular question often posed by buyers is ...
Such information is readily available in
the listing details. If the buyer feels it's been too long, they wonder what's
wrong with it or why someone hasn't yet bought it. Either way, they
usually pass on it. Or if they do decide to offer, the offer price is a
lot lower than you'd want. Thus, it's very important to price it right from the start with a ...
Ignore your listing agent's advice at your own peril.
If you want to try it at a higher price for awhile, I recommend limiting this experimental period to a week or two at most. You might as well accept reality and process a price reduction within that initial 2 to 4 weeks. Keep your listing ...
... with buyers and their agents.
If you reject your agent's price reduction request, which would make your listing competitive with property values of comparable sold listings as well as other active listings in your area, then be prepared to accept a lower price down the road. Call it ...
I witnessed situations during my career when a property had sold for a price lower than what I had felt could have been achieved if properly priced from the outset. It happens.
To be fair with your agent, advise them during the initial consultation - before they accept your listing - that you are committed to selling for fair market value, whatever that may be. Or that you will sell only if you obtain a particular minimum price. That way, your agent can make an informed decision as to whether or not they believe they can fulfill their responsibility to you. Or even if they want your listing.
If you're attempting to sell privately, make sure you perform all necessary research before beginning marketing. It's always best to put your best foot forward and avoid the necessity of one or more price reductions.
For more information on how a REALTOR® can assist you, including advising on when it's time for a price reduction, click here.
If you're considering selling your house - with or without an agent - check out my book The Happy Agent. Learn how to effectively evaluate your home, how to prepare it for market, how to advertise, handle showings and open houses like a pro, successfully negotiate an offer - and when it's time to throw in the towel and hire a professional.
You're dealing with what is arguably your largest single financial investment of your life. Wouldn't you agree that it's smart to make informed decisions? A small investment of your time and a pittance of your money could save you thousands of dollars and a ton of heartache. Remember - knowledge is power.
Available virtually everywhere print and e-books are sold.
A guide to help home owners sell privately, or find a good agent
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A must-read for anyone contemplating a realty career and the perfect antidote for agents seeking a more productive, less stressful direction for their own realty business.
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